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Digital Divide

By Amanda Rogos and John Latta

The Digital Divide has become the catch phrase of the "e-missing," those missing out on the new digital world. The concept of a divide or chasm between the digital haves and the digital have nots has become the rally point for politicians in the US and other countries. The concept of a divide has important implications to digital business in that it represents a portion of the population unserved. Further, the early digital adopters are likely to be the "low hanging fruit" of the adoption of the digital environment. Thus, the digital divide represents both an important social issue and a business challenge. Yet, solving the digital divide issue is not a market, per se. That is, it is hard to define as a market that which is a political or social issue. At 4th Wave we sought to better understand the implications of the divide and what this may mean for businesses. This brief report has broken the issue into the following:

Definition
Implications of the Digital Divide
US View
Worldwide Perspective
US Response
Business Response
Assessment

 

Definition

The digital divide is defined as the disparity between individuals with and those without access to a computer and the Internet. The divide is applicable to all population sectors encompassing both adults and children, but the focus of much attention on has been on segments of the population seen as underserved - low income, rural and multicultural areas and women.

Implications of the Digital Divide

There are two perspectives of the Divide:

Technology Adoption
Societal Disadvantages

In the first, the problem is quite simple - how to increase the use of technology. There are analog conditions in recent history which include: telephone service in the 1930's, television reception in the 1950's, home plumbing in the 1920's and later, and access to college education in the 1800's and 1900's. Each of these had technical, infrastructure, economic and social implications. There were also served and unserved segments of the population. The perception at the time was that a gap in society would be created between the two segments of the population on each issue. In some cases the government played a key role in erasing the gap. A good example is the concept of universal service, which came out of the perceived need to serve rural and distant communities with telephony. Achieving universal service was addressed in the Telecommunications Act of 1934 and subsequent actions by the FCC.

The societal issue is a more difficult one. One of the reasons is the wide variations in public opinion on the issue, the various interpretations of societal implications, the disparity in views on the role government should play, and the economic issues, in terms of public policy. One conservative view is that, why should the government play a role in solving what is fundamentally a market-based issue - having government play a role in erasing divides is only a form of social leveling of the population. The opposite interpretation is that there is a potential for major gaps in the population by allowing significant groups to hold back the productivity and effectiveness of the population, especially in areas as fundamental as the "new digital economy." This latter perspective is shared by both political parties.

It is virtually impossible to separate these two issues in the debate that has taken place on the divide. The debates on the divide are about how to find a solution, not on its root causes or if the government should be taking a role.

The US Government site provides a view that includes:

"To be on the less fortunate side of the divide means that there is less opportunity to take part in our new information-based economy, in which many more jobs will be related to computers. It also means that there is less opportunity to take part in the education, training, shopping, entertainment and communications opportunities that are available on line. In general, those who are poor and live in rural areas are about 20 times more in danger of being left behind than wealthier residents of suburban areas."

http://www.digitaldivide.gov/

US Perspective

The US government is at the center of the research on this topic. The United States Commerce Department released a report in July 1999 called "Falling Through the Net: Defining the Digital Divide"

http://www.ntia.doc.gov/ntiahome/fttn99/contents.html

that detailed specific gaps within various racial, income, education, geographic, and age sectors. This report is the basis from which many of the claims have been made about the existence of the divide. Statistics include:

Racial - gaps between White and Hispanic households and White and Black households are approximately 5% larger than in 1997.

Income - households with incomes of $75,000+ are more than 20 times more likely to have access to the Internet than those at the lowest levels. The same households are also more than 9 times more likely to have a computer at home.

Education - between 1997-1998, the divide between those at the highest and lowest education levels increased 25%.

Geographic - regardless of income, Americans living in rural areas are lagging behind in Internet access. At the lowest income levels, those in urban areas are more than twice as likely to have Internet access than those earning the same in rural areas.

Age - 64% of Americans over the age of 60 say they do not need a computer at home, 27% have computers at home, and 24% use the Internet or e-mail at home.

These statistics lead one to believe that there are many factors in the divide. What is interesting is that the report also shows that at higher income levels there is virtually no racial gap. This poses the question - Is race less of an issue than income? Supporting this belief is the fact that at lower income levels, there is no racial gap on home ownership of electronics. This could mean that other issues are involved such as the availability of suitable content on the Internet, the cost of PCs or Internet access or the image or stigma involved with advanced technologies.

The table below shows the change from 1997-1998 of two categories brought up in the report. (Source: NTIA)

The report surfaced other divides that exist within our society as well, including dial-up vs. broadband users and the portion of the population that is prohibited from using the Internet because of disabilities. This brings up the question though, isn't the digital divide merely a reflection of divides that have always existed within society? There have always been rifts between technology usage, with the advent of cars, telephones or the present computer-related devices. Some industry analysts even say that there is no digital divide but rather an education divide that is only exaggerated because of the growth of information technology. Jack Kemp has stated, "The real issue is the lack of wealth-creating opportunities and access to capital in the inner cities and depressed rural areas…the access-to-capital divide." He thinks the government should let private enterprise solve the market problems and should stick to lowering interest rates and removing regulatory barriers.

The role of the government involvement in the digital divide continues to be a subject of debate. Two opposing camps have begun to argue for and against government tax credits, Universal Service Fund (USF) programs and subsidies for companies that build business in underserved areas. One side believes, like Jack Kemp, that profitable market opportunities will help to facilitate services where there is a need. They argue that competition, availability and pricing will be sufficient and that government involvement should be limited. Others do not agree and argue that the digital divide is a national issue and needs the help of public policy. These government proponents predict that market failures in the poorest and least densely populated communities will require government assistance to become connected.

A report published in 1994 by several RBOCs through PNR & Associates (now INDETEC/PNR - www.pnr.com) found that minority consumers, including African Americans and Hispanics, spend significantly more on all types of telecommunications and cable TV services than non-minority households. The study concludes that these minority groups would therefore benefit as much, if not more than other groups, from competition and choice, which could be stifled by government intervention. A decisive answer to these issues and questions remains to be found.

Worldwide Perspective

The digital divide is not just a US issue. For example, on July 19th, a task force, set up by the World Economic Forum, presented several digital divide proposals to Japan's prime minister, Yoshiro Mori. The task force, which features executives from Sony, Sun Microsystems, Microsoft, Yahoo!, 3Com, Motorola, HP, Novell and Alcatel, proposed the creation of a Global Digital Opportunity Corps and smaller local technology community centers to offer digital divide solutions. Other proposals included telecommunications and Internet deregulation, universal access to education and training as well as financing for entrepreneurs. Mori will also announce a $12 million commitment in loans and $3 billion in grants over five years to information technology initiatives in the developing world stating that, "This digital divide issue is a crucial matter."

On July 21st Russia and seven other industrial nations met to discuss the same subject at their annual summit in Okinawa (www.g8kyushu-okinawa.go.jp/e/). One of the main themes of the summit revolved around, "Japan's Comprehensive Co-operation Package to Address the International Digital Divide" which was highlighted above. The package will attempt to raise awareness concerning IT opportunities in developing countries through IT friendly policies, provide technical education and training for IT positions as well as human resources needed for policy formation, and will help to establish appropriate environments for developing countries and their programs. No information was available on the site about the results of the summit or the initiation of this project.

With worldwide Internet usage rising exponentially and projected to reach 375,000,000 users this year (with the United States in the lead with 135,000,000 unique users) (eTForecasts) why has the divide become such a front-page issue?

US Response

The government response includes: Executive Office of the President, NTIA, and Congress.

Executive Office

President Clinton has also has made recommendations to Congress to address the divide.

- $2 billion in tax incentives for private sector donations of computer equipment training

- $150 million to train all new teachers to teach 21st century skills

- $100 million for the creation of technology centers in 1,000 low income communities

- $50 million for a public-private partnership to expand home access to computers/Internet for low-income families

- $45 million to promote applications of information/communications technology for underserved communities

- $25 million to accelerate private sector development of broadband networks in underserved communities

- $10 million to prepare Native Americans for careers in information technology/other technical fields

The President also spent several days in April on a promotional trip called the New Markets Tour - From Digital Divide to Digital Opportunity, in order to encourage companies to provide learning tools for school children. During the tour, he announced initiatives funded by Gateway, Novell, Hewlett-Packard, Qualcomm, PowerUp, AOL, and the Kaiser Family Foundation targeted at bridging the digital divide across the nation. Clinton also announced a $17 million initiative financed by an assessment on long-distance companies that would offer low-cost phone service to the nation's Indian reservations as a first step towards integrating American Indians into the information age.

NTIA

The lead organization in passing out and administrating the flow of funds is the National Telecommunications and Information Administration (NTIA). Their initiative, The Technology Opportunities Program (http://www.ntia.doc.gov/otiahome/top) is a merit-based program that provides start up capital for projects that use advanced telecommunications and information technology. The program, formerly known as the Telecommunications and Information Infrastructure Assistance Program (TIIAP), was started in 1994, and has given grants to state, local and tribal governments, health care providers, schools/libraries, police departments and community-based non-profit organizations to foster communication, resource sharing and economic development within rural and urban communities.

President Clinton has requested a total of $45.1 million dedicated to TOP programs in 2001. So far this year, the House of Representatives and the Senate Appropriations Committee have approved the provision of $15.5 million. $12.5 million was available for grants during fiscal 2000. A list of applicants for 2000 funding can be seen at:

http://ntiaotiant2.ntia.doc.gov/top/2000info/2000apps.cfm

Winners will be chosen in September.

The NTIA also initiated a Digital Divide Tour in which William Daley, Secretary of Commerce traveled through out the United States promoting efforts to close the technology gap with creative community solutions.

Congress

Within Congress, there are at least ten bills pending that will generate discussion on government programs to expedite Internet growth in underserved areas. Examples are as follows:

HR 1685 - Internet Growth and Development Act of 1999 Would increase the capacity of local telephone companies to provide Internet service at local rates. Would allow incumbent local exchange carriers (ILECs) to extend out of their local network (LATA) if they do so through the use of their own network hardware.

S.2229 - National Digital Empowerment Act Would increase e-rate spending, create an Education Department-based clearing house for technology education information, double state teacher training funding, allow Head Start centers, structured after-school programs and programs with federal funding for job training to qualify for e-rate Internet wiring discounts, set aside $25 million for the E-Corps for tech assistance in schools, libraries and communities, authorize $100 million for community technology centers, and authorize $10 million to start a program to put computers in students homes.

HR 4061 - Digital Divide Elimination Act of 2000 Would start a refundable tax credit up to $500, increase the charitable tax deduction rate for corporate computer donations, extend the charitable deduction for computer donations through 2004, and expand the deduction to include donations to nonprofits and low-income households.

S.2321 - Telecommunications Modernization Act Would provide a 10% tax credit for companies investing in providing broadband services to rural America.

S.2307 - Rural Broadband Enhancement Act Would amend the Communications Act of 1934 to encourage broadband deployment in rural America by setting aside low interest loans for broadband construction and providing the chance for Senators to introduce a variety of tax credits, low interest loans and regulatory relief.

Millennium Classroom Act Would provide incentives to give old computer equipment to schools, extend tax benefits to computers that are 3+ years old.

Business Response

Various companies are providing solutions ranging from access to technology, education, financial assistance/donations and actual hardware/products. Some examples include:

Access to the Internet

Companies helping to provide access to technology include AT&T, AOL, Microsoft, SBC, Cisco Systems, CyberYouth Networks, Tachyon.net, and the Asian American Federation of New York. We have chosen to highlight three of those projects below:

AT&T has initiated several programs in the effort to spawn technology centers for educational purposes. A collaboration with the NAACP, the National Urban League and the Community Technology Centers' Network has begun nationwide Community Technology Centers that offer under-resourced communities access to technology. One of these programs, the Los Angeles Neighborhood Technology Center has established twenty-five neighborhood-based technology centers and helps to support the Los Angeles County Office of Education's Technology for Learning Initiative. AT&T also provides resources through an AT&T Learning Network and by supporting the Puente Learning Center in South Central Los Angeles.

AOL (through the AOL Foundation) has also been active in charitable technology programs. The company has established the AOL Rural Telecommunications Leadership Awards, a partnership with the National Center for Small Communities which seeks to reduce the digital divide by recognizing telecommunications in rural areas. AOL has also partnered with the Benton Foundation to create helping.org a nonprofit Web site that offers services and volunteer information to communities. The site has enabled user contributions to more than 620,000 US charities.

Microsoft and the Bill and Melinda Gates Foundation have rewarded multiple grants to organizations including the Connected Learning Community, Working Connections, Higher Education for Minorities, and the TRIO programs. Microsoft has made donations of more than $1 million in funds and $540,000 in software resources to establish technology centers in Boys & Girls Clubs around the nation. The Gates Foundation has donated similar funds and software to offer technology access at libraries in low-income communities.

Products

Product development has not been as aggressive. Worldgate Communications has begun a marketing campaign for the Channel Hyperlinking Service, a subscription service that enables television owners to access the Internet and e-mail with an existing cable connection. The service does not need a PC, phone line or set-top appliance in order to connect and therefore is being marketed as a digital divide solution. Charter Communications has taken advantage of this product and in partnership with the local government, has offered residents in LaGrange, Georgia free hardware and Hyperlinking services for one-year. Cablevision SA de CV will do the same in Mexico City and Congressman Billy Tauzin has suggested a similar program for schools in Louisiana.

Oracle also offers a solution. In partnership with the New Internet Computer Company, Oracle has established "Help Us Help," an initiative that offers special edition PCs to consumers for donation purposes. Individuals or businesses can buy the PCs for $199 ($376 with monitor) for donation to underserved non-profit organizations, schools or libraries. The computers run on the Linux OS and have a 266Mhz microprocessor with 64MB of memory. They have no hard drive since they are targeted at Internet access, and come with a DSL connection, cable modem or 56k modem.

Content

At first blush, content does not seem to be a problem on the Internet. Yet how many sites cater to the needs and interests of Hispanics and Black Americans or inner city teenagers, let alone citizens of less developed regions of the world? Fortunately, content is beginning to expand to include these groups, albeit slowly, with the participation of organizations like Cyber Youth (Malaysians), OneNetNow, Global Mecca (Latino and African Americans), HarlemLive (Harlem teens), and Oxygen Media (women). We will highlight two of these initiatives.

OneNetNow is a member-driven online community that provides content for Latino and African Americans. The site offers content and e-commerce opportunities in seven categories:

Entertainment & arts,
Sports & hobbies,
Faith & culture,
Tech & computers,
Education & health,
Politics & news, and
Money & business

HarlemLive, a site produced by teens and sponsored by the Institute for Learning Technologies and Playing 2 Win, has the same type of goal and provides news and events from Harlem, poetry and memoirs of teenagers in the area and community and business links.

Training and Education

Training and education are a very important part of the effort to close the digital divide. There are many programs providing technology specific job training and family tutoring. Examples include:

PowerUP, a collaboration of 12 nonprofit organizations that have launched a multimillion dollar initiative to help ensure that America's underserved young people acquire the skills, experiences and resources they need to succeed. AOL has pledged 100,000 free Internet access accounts for this purpose, and

CitySkills.org, an organization that works with community-based programs to offer training for high-demand Web related jobs to underserved urban adults.

Financial

Companies are also offering financial support for education and technology building programs that will help underserved areas. 3Com and the US Conference of Mayors have pledged $2 million in grants for equipment, training and consulting in 20 US cities in order to build networks for government and educational services. The Semiconductor Equipment Industry (SEMI) has also pledged $1 million to Silicon Valley organizations to help schools and teachers to prepare students for high tech careers.

Other grants have been provided by Bell Atlantic (Asian American Federation of New York, NAACP, National Urban League, and Hispanic Federation of New York) and Hewlett Packard ($15 million, of which $5 million will help build a building for Plugged In, a community center offering technology training in California).

Assessment

A panel of experts recently told the United Nations that by 2005, everyone in the world should have access to the Internet within a days walk. The panel, made up of government ministers from Africa, Asia, Eastern Europe and representatives from private business and foundations did warn the UN though, that this goal would take hard work and money to bring to fruition. For their part, they urged governments, international organizations and voluntary groups/foundations to raise $500 million to improve access to the Internet in developing countries. The private sector was urged to raise another $500 million (a proposal that was discussed at the G8 Kyushu-Okinawa Summit Meeting 2000).

Again we are faced with the question - why are the governments of the world so united in their concern about the digital divide? After unreturned calls to Chester Straub, Assistant Secretary of the EDA and J. Thomas Cochran, Executive Director of the US Conference of Mayors, two sponsors of an EDA and Digital Divide summit held in New Mexico earlier this year, the question still lingers. Further, when there is a gross lack of effective government supported education in much of India, destitute populations in Bangladesh, endless warring factions in Sierra Leone, listless drunken Soviet males whose life span is plummeting below 50 and an AIDs epidemic throughout much of Africa, the digital divide it is but a blip on the radar screen of survival.

To further complicate the issue, some US companies have expressed the belief that the digital divide is an RBOC ploy to receive protection from competition in the form of incumbent benefit packages. In America's Network, May 1st issue, Tom Vicks, director of engineering at Pioneer Communications was quoted as saying, "The whole subject of the digital divide is nothing but smoke and mirrors." The article went on to chronicle companies that were providing broadband connectivity in rural areas, which rivaled urban services.

This, combined with the information leads one to conclude that that the digital divide may be just a brilliant marketing strategy for incumbent providers and the government, rather than a national emergency. We have chronicled companies striving to reach minorities in urban areas, rural residents and Indian reservations. We have seen cable's initiatives to bring educational television content and now cable modems to communities across the United States. To date the digital divide has largely been a cover over many programs to pass out grants. Yet, we have not seen where this has resulted in a major benefit to society. It may be too early to determine.

Additional Culturally Aware Websites we encountered in our research include:

www.latinolink.com - Latino community

www.lincproject.org - low income networking and communications project

www.internetindia.org and www.indiaconnect.com - India and Indian culture and business

www.minorities-jb.com - Minority job bank

www.dogonvillage.com - Connects users to links related to people of color across the African Diaspora

www.hispanic.com - Hispanic community information

www.iadvance.org - promotes high-speed access for all Americans

www.iaginteractive.com/emfa - supports the principles of universal access to e-mail/Internet

www.blackfamilies.com - African American adults

www.universalservice.org - telecommunications

www.techsoup.org - helps charities find technological resources